Jobless claims continue to surge, as several industries, especially in the hospitality sector, are still dealing with restrictions to their operations and barely managing to stay afloat. Consequently, the mass lay-offs are causing low-income groups to experience major financial distress, and tens of millions are potentially facing eviction in 2021. But although we are mired in the worst economic collapse ever recorded in all of U.S. history, the ones at the very top of the economic pyramid are laughing all the way to the bank. That’s what we discuss in this video.
The financial abyss that lies between the haves and the have-nots is being placed under scrutiny, as the event of the health crisis has enabled authorities to deliberately allow the downfall of tens of thousands of mom-and-pop business through the introduction of deeply flawed monetary policies that have been pushing financial assets up and the economy further down. While stock market indexes staged a remarkable rebound from the lows seen last March when the outbreak first hit, the chasm between the wealthy and the poor has been dramatically widening to proportions never witnessed in U.S. history.
A recent BofA Global Research report has revealed that a measure of the differential between gains in financial assets and the health of the economy hit a record at 6.3X in 2020. At this stage of the recession, it goes without saying that stock markets have become completely divorced from economic reality. Stock prices are absurdly overvalued compared to historic levels.
According to Business Insider estimates, since the burst of the sanitary outbreak, multiple prominent billionaires expanded their wealth by over a half a trillion dollars. This impressive wealth growth occurred despite the 20 million unemployment claims registered at the peak of the crisis last spring, as American workers were left jobless once lockdowns and social distancing measures were implemented to limit the spread of the virus.
A report by Moody’s Investors Service suggested that income and wealth inequalities are keeping the U.S. economy from reaching its full potential and posing an ongoing “social risk”. That is to say, much more civil turbulence might arise as a consequence of worsening life conditions for low-income groups, which have been particularly affected by the economic fallout of the health crisis and left without alternatives and a proper safety net.
As more jobs started being shed since last month, the country is undergoing a significant loss of momentum that will likely compromise our chances of finally heading out of this recession. Even though 2021 has just begun, first-time claims for unemployment insurance jumped to 965,000 during the week ended on January 9, evidencing the signs of turmoil brought on by restrictions in economic activity. The number was the highest recorded since the week ended on August 22, when more than 1 million claims were filed.
Meanwhile, a new report from Bankrate.com has revealed that only 39 percent of all Americans would be able to cover an unexpected $1,000 expense, which means roughly 61 percent of Americans can’t afford to have any emergency spending. The survey also found that Americans are getting increasingly less optimistic about the future, especially amongst older groups, with only 28% of those aged 66 and older expecting a better financial situation this year. It has become apparent that pessimism is sweeping across the country, as many are fearing another financially painful year. Just as consumers’, business owners’ optimism is falling as well.
It’s no wonder why so many people are losing their hopes for a better year. Traditionally, Americans have been known as optimistic and forward-thinking people, but in face of the meltdown of so many institutions, and mounting uncertainty about what’s lying ahead, there just aren’t any reasons to be optimistic about the U.S. economy in 2021.
Knowing that our leaders aren’t worried enough about fixing the economy by safely reopening businesses and putting workers back to their posts, but instead, they will likely continue adding to the national debt by launching massive spending to keep the markets heated while Main Street crumbles, we will be inevitably seeing more civil agitation in the months ahead – the perfect recipe for chaos.
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